laboratory budget powerpoint

7/22/2019 Laboratory Budget Powerpoint

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LABORATORY BUDGET


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ASSET VS. EXPENSES

KEY TERMINOLOGIES


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CAPITAL EXPENDITURES (CAPEX)

VSREVENUE EXPENDITURES (OPEX)

KEY TERMINOLOGIES


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WHAT IS BUDGETING

The process of planning,

forecasting, controlling, andmonitoring the financial

resources of the organization


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IMPORTANCE OF BUDGETING

For OPEXTo anticipate the sources (income)

and uses (expenses) of funds in

short period of time or within one

year


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IMPORTANCE OF BUDGETING

For CAPEXTo determine what kind of assets are

needed by the company and the

capacity or ability of the company to

purchase such assets


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OPERATIONAL BUDGETING (OPEX)

Flexible budgetingZero-based budgeting

CAPITAL BUDGETING (CAPEX)

TYPES OF BUDGETING


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I. THE OPERATIONAL BUDGET

The process of planning for the

laboratory as an ongoing businessconcern; accounting for everyday

needs and expenditures


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I. THE OPERATIONAL BUDGET

Flexible Budgeting: A budgetingprocess that attempts to set

expenditures based on a variable

workload volume

Zero-Based Budgeting: A methodthat analyzes needs based on

prioritizing of goals and objectives

and not on past allocations


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1. Time Frame the annual budget, whichcovers 1 year or budget cycle, is themain working guidelines for

management.

OPERATIONAL BUDGET PREPARATION


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2.Forecasting Stage factors:i. Shifts in patient mix or volume

ii. Changes in medical staff compositioniii. Changes in business parameters such as

inflation and reimbursement rates

iv. Expansion or cutbacks in services offered by

the hospital or laboratory

v. Population fluctuations brought about by

changes in the local economy



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3. Scheduling Stage when budget isprepared.



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4. Synthesis of information how thefinancial information is organized is

very important. The budget report isorganized into three parts:

i. Revenue and volume figures

ii. Itemized cost categories

iii. FTEs and labor hours



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OPERATIONAL BUDGET (Income vs. Expenses)

Service Income

Complete Blood Count (P120 x 12,000px)P1,440,000

Routine Urinalysis (P100 x 6,000px) 600,000

Routine Fecalysis (P100 x 3,600px) 360,000 P2,400,000

Less: Cost of Service

Reagents (P50 x 12,000units) P600,000

Syringe (P350 x 120 boxes) 42,000

EDTA Tubes (P450 x 120 boxes) 54,000

Plastic cups (P50 x 192 packs) 9,600

Salaries and Wages (P20,000 x 12 mos) 240,000 945,600

Gross Margin P1,454,400

ILLUSTRATION

(PRO-FORMA INCOME STATEMENT)


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OPERATIONAL BUDGET (Income vs. Expenses)

Gross Margin P1,454,400

Less: Operating Expenses

Utilities Expense P 43,000Advertising Expense 10,000

Rent Expense 100,000

Repairs and Maintenance 50,000

Office Salaries 180,000

Insurance Expense 4,500Depreciation Expense 50,000 437,500

Net Income before taxes P1,016,900

Less: Tax Expense 305,070

Net Income P 711,830

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ILLUSTRATION


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CAPITAL BUDGETINGTwo types of analysis:1. Narrative description: includes awritten justification of the project and a

prioritization of the competing

proposals.

i. Justification a detailed rationale for arequest; why the project is needed, how itwill benefit the laboratory, and why it

should be considered over competing

projects.


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ii. Prioritization an additional step injustification is to prioritize the project,

both in the time frame and in relation to

other requests; capital budget forms are

scaled according to rank priority

iii. Opportunity Costs the value of what isgiven up to pursue another project, itmust be part of the overall decision

making process


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CAPITAL BUDGET

2 Computer Units @ P30,000 each P 60,000

1 Microscope @ P120,000 each 120,000

Total Capital Expenditure for 2013 P180,000

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ILLUSTRATION


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2. Quantitative techniques : use to determinethe financial feasibility of the project.

Methods used are:

i. Payback Period the length of time it will taketo recover the cash outlays for a project.

ii. Average Rate of Return the average yield overthe life of an investment

iii. Net present Value (NPV) the worth of futureearnings at todays rates; Time Value of Money

the future value of a dollar compared with today


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iv. Internal Rate of Return The ratio ofcash flow and cost-of-capital factors to

the amount of investment requiredv. Required Rate of Return A bottom-linelevel of income required by a company

before any project is considered.

laboratory budget powerpoint

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